Please, someone staighten me out; boil it down to simple terms, should someone dare to tackle some, or all of the above questions. This is all I have to do on my day off, nursing my wife back from her colonoscopy earlier today. Can you tell I'm bored, and have nothing better to do?
I'll use BLT as an example of how points are managed at a DVC resort.
As one of the many owners at BLT, I can use my points to book a room as early as 11 months at BLT. From 11 months to 7 months before check-in, I am competing only with other BLT owners for rooms at BLT. DVC members who own at other DVC resorts have to wait until the 7-month mark before they can book a room at BLT. From 7-months until the check-in date, I'm competing with all DVC members if I try to book a room at BLT.
Then, beginning at 60 days before check-in, non-DVC members willing to pay cash for a room can try to book any BLT room that is still available. This inventory, called the breakage inventory, is still available to BLT owners and other DVC owners, but cash guests booking rooms through the Central Reservation Operation (CRO) have an equal chance at these rooms.
So, as you can see, the earlier I try to book a room at BLT, the better my chances of getting a reservation. The longer I wait, the more people I am competing against for a limited number of rooms.
There are about 5.7 million points allotted to BLT. To date, about 4.95 million points have been sold to DVC members. That leaves about 700,000 points that belong to Disney Vacation Development (DVD), the Disney component that develops all the DVC resorts. For booking and reservations purposes, DVD is treated just like any other owner at BLT. I can make a reservation at 11 months using my BLT points, but so can DVD using its 700,000 points.
DVD does not market reservations itself. Rather, it has CRO advertise and accept cash reservations for the rooms at BLT. I don't know how DVD actually turns the 700,000 points over to CRO, but I suspect that it tries to anticipate the demands of cash guests by turning over a certain number of studios, one-bedrooms, Magic Kingdom views, etc.
Whatever money DVD gets for renting out its points belongs to them. It does not share that money with the DVC members, nor does it even have to account for that money.
Income derived from renting out the breakage inventory -- rooms that aren't booked by members within 60 days of check-in -- is shared with all DVC members. In 2010, BLT's annual maintenance fees were lowered by $0.0745 per point because of income received from breakage inventory that was rented out for cash reservations.
There are some other items that come into play when determining the availability of rooms at a DVC resort. As other have mentioned, whenever a DVC members exchanges their points for a
DCL cruise, RCI, Adventures by Disney, Concierge Collection, Club Cordial, etc., those points no longer belong to the DVC membership. They are turned over to CRO so that the underlying space can be turned into a cash reservation.
Another factor that affects availability at DVC resorts is the percentage of the resort that has been declared for the DVC membership. At the older resorts, 100% has been declared for the Vacation Club. At the newer resorts, DVD has not yet declared the entire resort for the Vacation Club. At BLT, 96.04% has been declared, while at AKV only 70.34% has been declared. What this means is that, on any given Use Day, individual DVC members and DVD can use their points to book up to 96.04% of BLT or 70.34% of AKV. The remaining undeclared portion belongs exclusively to DVD. DVD can do whatever it likes with this undeclared inventory. It can make it available for cash reservations, it can set it aside in case rooms are out of commission for repairs, it can give away rooms as incentives, etc.
I've glossed over some points, but I hope I made things a little clearer in your mind about how points are managed at a DVC resort.
Hope your wife is feeling better and that the results of the colonoscopy were good.